Atherton joined the U.S. Foreign Service in 1947, and served in Stuttgart, Bonn, Damascus, and Aleppo. From 1959 to 1961, he was Iraq-Jordan desk officer, then Officer in Charge for Cyprus, in the Bureau of Near Eastern and South Asian Affairs at the State Department.

In 1961-62 Atherton took advanced economic studies at the University of California at Berkeley. From 1962 to 1965, he was economic officer in Calcutta, and from 1965 to 1966, he was Deputy Director of the Office of Near Eastern Affairs at the State Department.

In 1966 and 1967, Atherton was Country Director for Iraq, Jordan, Lebanon, and Syria. From 1967 to 1970, he was Country Director for Israel and Arab-Israel Affairs.

From 1970 to 1974, Atherton was Deputy Assistant Secretary of State for the Bureau of Near Eastern and South Asian Affairs. From 1974 to 1978, he was Assistant Secretary for Near Eastern and South Asian Affairs. He was a member of the U.S. negotiating team at the Camp David summit in September 1978. The summit produced the Camp David Accords. He served as United States Ambassador to Egypt from 1979 to 1983.

From 1991 to 1992, Atherton served at Hamilton College as Sol M. Linowitz Visiting Professor of Government. There, he taught a small seminar on the history and dynamics of the Arab-Israeli conflict.